The FTC's New Endorsement Guides

Increasingly, marketing is occurring virally, particularly via the Internet, mobile and other evolving media, through word-of-mouth (“WOM”), including by means of the use of product sampling and consumer reviews, comments and recommendations. Product sampling involves distributing products to influential new-media users/authors in the hope that they will positively discuss the product with their followers and friends. Such so-called recommendation marketing, which may or may not encompass sampling, is well suited for consumer driven social media and can take many forms ' ranging from paying or encouraging an influencer to write a blog or post or tweet about a brand, motivating consumers to initiate e-mails that send product listings or other information to friends via “send-to-a-friend” e-mail tools made available to consumers by online merchants or marketers (notwithstanding the FTC's recent guidance on send-to-a-friend campaigns, see, FTC CAN SPAM FIND Rule, 16 CFR Part 316, Federal Register, Vol. 73, No. 99, pp 29654-29680 (May 21, 2008), this technique has spawned several recent lawsuits, one of which is being defended by the author and his firm), displaying a user's name and/or picture in connection with an ad that is directed to the user's friends on a social networking site (this practice is among the types of social media advertising that formed the basis of a lawsuit filed against Facebook in California in August 2009. Elisha Melkonian et al. v. Facebook, Inc., CA Superior Court, Orange County, Case No. 30-2009-00293755 (filed August 17, 2009)), and eliciting product reviews on retail Web sites. In one of its more insidious forms, recommendation marketing can involve a marketer paying Internet users to post disingenuous positive product reviews at online retailers or “astroturfing,” where advertisers or their agents pretend to be unaffiliated consumers and spread misleading or false information in furtherance of the advertiser's objectives. (The Electronic Retailing Self-Regulation Program of the National Advertising Review Counsel, a self-regulatory board, has brought actions in 2009 against advertisers who ran seemingly objective informational blogs about topics such as diet and beauty and used them to promote their own products in seemingly objective editorial reviews. See, case #219, Urban Nutrition, LLC (WeKnowDiets.com); and case #222 E-Commerce Solutions, Inc. (Vibrant White Tooth Whitener).) For example, last January it was widely reported in the media that the lead sales rep of networking-technology manufacturer Belkin was allegedly covertly paying consumers to post positive reviews on Amazon.com and Newegg.com, without regard to whether they used or liked the product, and to mark negative reviews posted by others as “not helpful,” and was further counseling them on how to do so and to keep the connection to the company a secret (see, Callari, “Top Ten Branded Social Media Nightmares,” http://investorspot.com/articles/top_ten_branded_social_media_nightmares_30874).